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Quick answers about debt

The whole globe does not have any debt – the Earth does not owe Jupiter! Total debt owed by governments, companies and individuals to individuals, companies or governments in other countries is $74 trillion as of 2017. This is equivalent to $10,000 per person, or 100% of global income. Through the early 2000s it grew to a high of 113% of global income in 2007, before falling slightly after the global financial crisis of 2008.

Loans can be a useful way for a lender to share resources and enable investment that allows the loan to be repaid. However, lenders can knowingly lend money for a bad project, or changes in circumstance can mean the project fails. In such cases, it is only fair that the lender shares in this cost, rather than all of the burden being put on those who have borrowed the money, whether it is a country or an individual. This happens all the time with private companies but should also apply to governments.

In addition, debts can be illegitimate if the people paying them did not have a say in the decision to take them out and/or were harmed by what the loans enabled. For example, the UK government lent the Indonesian dictatorship of General Suharto money to buy tanks and warplanes that were then used to violently repress Indonesia’s own people. After the dictatorship fell, the UK insisted that the Indonesian people continue to pay back the debt.

Finally, if there has to be a choice between repaying debt to a rich lender and meeting basic needs such as food, water, shelter, or basic services such as healthcare, it can only be right for the money to be spent on protecting human rights and providing for basic needs. Otherwise, debt is being prioritised over life itself.

A “debt jubilee” is a celebration when unjust debts are cancelled. The word ‘Jubilee’ comes from the Jewish sacred writings (the Old Testament of the Christian Bible). It was a periodic celebration in ancient times when debts were cancelled, slaves freed, land returned to its original owners and fields left fallow.

All of these actions were linked. For peasants in the Middle East at the time, if they had a bad harvest, they would get into debt. Then in order to pay this debt they would be forced to sell their land. And finally they would have to sell themselves and their family into slavery. Cancelling debt and freeing slaves was undoing this injustice.

There is historical evidence for debt jubilees – cancellations – in Babylon, dating back almost 4,000 years. Such cancellations happened in response to peasant uprisings.

The idea of a debt jubilee has continued to inspire people through history. In the 1990s, campaigners for debt cancellation for countries in the global south decided to call for a Jubilee for the year 2000. Jubilee Debt Campaign is the organisation in the UK which has continued and evolved that campaign.

Yes, but not the one that is usually reported. The UK government’s debt is 89% of national income, but of this a quarter is owed to the UK government itself – the Bank of England – and another half is owed to other people and companies in the UK, such as pension funds and savers. Only a quarter is owed outside the UK, and the UK government’s debt payments outside the country are just 5% of its revenue, one of the lowest levels of any ‘rich’ country.

Since the global financial crisis of 2008, the UK government has been able to borrow at record low interest rates (1.4% fixed for 10 years at the start of 2018) making it the perfect time to invest in measures such as public housing and renewable energy which will save money over time.

However, the debt of the UK’s private sector is very worrying. Between the late-1980s and 2008 the debt of the private sector grew from 200% of national income to 500%. This huge debt, especially that of banks, helped cause the financial crisis of 2008. It has since fallen to 400% of national income, but is starting to rise again.

Jubilee Debt Campaign is focused on campaigning and advocacy on debt issues. We do not provide advice services. If you are facing personal debt problems and looking for help and advice there are several free advice services that you can access:

Citizens Advice Bureau (CAB) – have online advice on debt or you can speak with an adviser at your local CAB which you can find here.